Forget The FCC: Should We Be Looking To The FTC To Save An Open Internet?

from the that-could-be-something dept

Nearly all of the focus on the big net neutrality fight of the summer has been on the FCC. This makes sense, since the FCC regulates internet and phone access providers, and that’s where this battle is. The small bits of focus that go beyond the FCC seem to move only over to Congress, and the question of whether or not it would push some sort of legislation that would mandate the FCC do something different. But, the problem is that Congress simply won’t do anything on this (the issue is too partisan and too toxic) and the FCC appears to be similarly constrained, mainly by a chronic lack of backbone, combined with the ever present revolving door between the FCC and the telco/cable companies they “regulate” (a problem we’ve been reporting on for years). The FCC could do some things, but just doesn’t seem motivated to (yet).

However, it seems that another option that gets no attention at all might be having the FTC, rather than the FCC, rescue the open internet and put the big broadband players in their space. The Federal Trade Commission has a fairly broad mandate to protect consumers, and while there are times that I worry its crusading can go a little far, for the most part, it really does seem to do a good job figuring out ways to step in where other parts of the government are failing to protect the public and innovation. While Congress and the USPTO are still failing to do anything useful about patent trolls, the FTC has been looking for ways to combat trolls for a few years. The FTC has also gone to bat for innovative companies stymied by local regulations, including Tesla and Uber. Over at the Disruptive Competition blog, Glenn Manishin has a great post about the FTC’s “competition advocacy” and how important it is in a variety of markets.

It seems like the FTC can — and perhaps should — get involved in the net neutrality fight. In fact, in many ways, it may be a much better fit, in part because it could pretty easily justify getting involved at a few key juncture points. First, it could easily jump in on the current interconnection disputes, which appear to be where the real fight is happening these days (and it’s an area which the Tom Wheeler FCC is insisting is “separate” from the net neutrality fight, even though it’s really not). The interconnection fights have been a way for the big broadband providers to get everything they want without “technically” violating the concept of net neutrality on the last mile. The link above describes this if you haven’t paid close attention to the differences between the fight over discrimination on the last mile and with interconnection.

But the key issue with the interconnection fights, as we were just explaining, is that the the broadband players are simply failing to deliver to end users what they sold them — and that’s a classic example of the situations where the FTC normally steps in. Customers of broadband providers are paying them to deliver the content they request over the internet, and the broadband providers are purposely not delivering that content at a quality level they have promised to provide. It seems like a situation where the FTC might easily step in and point out that broadband providers made commitments to customers that they have failed to deliver.

A second area where the FTC could have an impact is in the arena of competition advocacy to get around local barriers to competition. As we’ve discussed at length over the years, the big broadband players have worked incredibly hard to ban competition at the local level, often in egregiously offensive ways, including (but not limited to) total bans on municipal broadband in 20 different states — even as many (though, certainly not all) municipal broadband projects have shown tremendous success, and with that success comes better broadband.

While Tom Wheeler has indicated that the FCC may step in to preempt state laws that block competition, the FTC can start taking action on that as well, putting pressure on states and cities, as it’s done with things like Uber and Tesla. Furthermore, it seems that if broadband providers like Verizon are going to make use of common carrier rules in order to get subsidized access to rights of way such as conduits and electrical poles (while trying to stay free of the exact same rules for the same services they run over those lines), the very least they can do is let others get access to the same opportunities.

At the heart of all of this is anticompetitive practices by the big broadband players, and that’s exactly where the FTC is supposed to step in and do something. To be fair, the FTC has explored this issue in the past, and some in the FTC have suggested they should take a larger role in the process. And, in the meantime, there are clear pros and cons to an FTC approach rather than an FCC one (including the lack of a specific ability to outright ban discriminatory practices) — but with a weak FCC and a nearly impotent Congress on this issue, it seems like getting the FTC ramped up and involved in this issue might actually lead to better long-term results.

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Comments on “Forget The FCC: Should We Be Looking To The FTC To Save An Open Internet?”

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ThatFatMan (profile) says:

Dear Mikey

Why do you hate the USPTO so much? Do you even understand what the PTO does? Since you went out of your way to take an unneccessary shot at the people who work here, maybe you can take some time out of your day to actually talk to some of them and learn a bit about what we do. Just a thought. While I enjoy techdirt and all, I’m personally getting a bit irritated with the constant uninformed, misunderstood bashing of the PTO by you in particular.

Gwiz (profile) says:

Re: Dear Mikey

Since you went out of your way to take an unneccessary shot at the people who work [at the USPTO]….

I’m assuming you mean this statement by Mike:

While Congress and the USPTO are still failing to do anything useful about patent trolls…

Could you explain why you think that was “an unneccessary shot”?

If the USPTO hasn’t done anything to combat patent trolls, then it is a very relevant point, if you ask me.

Anonymous Coward says:

Re: Dear Mikey

The USPTO rarely meets a patent application that they don’t grant.

Just couch the application in ambiguous terms and let the USPTO go to work ignoring prior art, obviousness, naturally occurring phenomena, and abstract ideas. And if at first, the application does not succeed, the USPTO will let the applicant try, try, and try again until its ambiguity is just right.

Then the newly granted patent can be used to claim anything and everything is infringing.

Hooray, licensing fees for all nonpracticing entities and settlements galore for the patent lawyers!

ThatFatMan (profile) says:

Re: Dear Mikey

I’m going to do my best to address all the questions and comments here. First off, let me be clear, that yes, I am an Examiner. And what I have to say are my views, and I do not speak for the Agency.

First off, I agree that trolls are a problem. But they are a small part of the whole for one. But what can the PTO really do? Aside from not granting bad patents as you say, there really isn’t much. We have little control over issued patents. And less control over what people choose to do with them. At best, the commissioner can order a Reexamination. I have no idea how often this happens, if at all.

Second, people need to understand what a patent is and what it isn’t. It grants a limited right to exclude others from making or using your CLAIMED invention. Not the invention you’ve disclosed, not the pictures or the description or the title. Only what is claimed. It doesn’t give an exclusive right to make or sell a product. Those claims are the legally enforceable part. Trolls are doing nothing more than enforcing their right to exclude others. Whether or not they have a “good” or “bad” patent doesn’t matter until it gets to court. Once issued, as I understand it, there is a presumption of validity until proven otherwise.

Third, just my opinion, the story here was about Net Neutrality and the FTC and whether or not they should get involved. My opinion, the shot at PTO did nothing to help make the arguement that they should. And for those who say he was taking a shot at the Agency and not the people who work there, just remember that the Agency can do nothing. It has no capability. It relies solely on the people who work there to produce anything. So a shot at the Agency is directly a shot at the people who do the work the Agency is credited with.

There is a notion that we grant everything. Simply not true. I cant speak for every area within the Agency or every Examiner, but plenty of applications are never issued. We have this thing called an abandonment. We use it. That being said, I’ll admit that I don’t think we have a perfect system. We have production, don’t meet it and it can cost you your job. We have limited hours to search cases, most of those hours depend on the technology, and most of those hours were settled on 40 years ago. We’ve more than doubled the amount of issued patents since then, not to mention all the pre-grant publications and the expanded foreign patent databases as well, and the increasingly complex nature of technology as it evolves. We don’t get unlimited time to examine. To some extent it is argued that that’s OK because we have computers to search instead of paper files, and that makes it faster. We have a limited number of tools at our disposal to reject cases. Often times we need some patent or publication. It is difficult to reject without it, in part because of the courts and in part because the people who sign cases are reluctant to reject without it. If anything congress and the courts haven’t given us enough tools to reject things. That is only made worse when we give applicants as many cracks at getting a patent as they can afford. For example, when I issue an Final Rejection that is supposed to close prosecution, but we allow them to file an After-Final Amendment that we still have to consider. Then they can file Requests for Continued Examination after that. So it goes on and on. The Agency once tried to impose limits on the number of claims, but the outside fought it and won. Those rules would have likely helped, because it limited the numbers of claims to examine, hopefully giving us claims better directed at the invention and less fishing expeditions. With fewer claims we can hopefully do a better examination on those claims, leading to better quality. And hopefully it would help us reduce the backlog of applications. But it wasn’t allowed to happen. We do the best job we can with what we are given to work with. But it’s far from perfect.

I will never say that sometimes things are issued that probably shouldn’t have been. And I could write a lot more here, but I am hopeful that this at least gives you my perspective on some of the issues and gives you an idea of what we do and why things happen the way they do. It is isn’t perfect, it never will be, but there is certainly room for improvement. But try to keep in mind that we are working with the system the courts and congress have given us.

Hope this answers most of you at least.

John Fenderson (profile) says:

Re: Re: Dear Mikey

Thank you for this.

A large number of the commenters here (and Mike) actually do understand all that stuff. Probably most. But perhaps you don’t understand where the criticism is coming from. When you have a system that appears to be doing more harm than good, it is understandable to aim criticism at the agency that is supposed to be administrating that system.

It is true that as much, maybe more, of the blame is on the shoulders of congress — but the USPTO is hardly blameless nonetheless.

Given that the USPTO is one of several government agencies that are involved with a broken process and aren’t solving it (whether because they won’t or because they can’t), contrasting it the FTC’s example of appearing to be fighting to achieve the goals the agency exists to accomplish is a fair point when you’re arguing why the FTC has a genuine interest in the internet.

ThatFatMan (profile) says:

Re: Re: Re: Dear Mikey

You’re welcome. I think that one of the things PTO can do much better than it does is try to educate the public about what we do and what patents are. That’s what I am trying to do because I feel like there are some things people here don’t seem to understand. Like many people, I want fair and unbiased, educated reporting. I feel that some of that is missing here. Mike at times comes across as not having much of an idea and very biased against the PTO. In fact, I’ll even say his more recent article about the CAFC and obviousness was one of the best articles he has written about patents that I’ve read.

I will never sit here and say the Agency doesn’t deserve criticism at times. It, and the people that represent it, do at times deserve to be criticized. I have no problem with criticism when it’s deserved. I’d even like to think I didn’t let the PTO entirely off the hook with my previous comments either. But the PTO has tried to do things to fix problems in the past and has been met with opposition.

The PTO is certainly not blameless, but the bulk of the problems are beyond the control of PTO. Like the FTC, we operate in accordance with the laws as best we can. The FTC at least has laws and rules on the books that allow them to do what Mike suggests they should consider. If the PTO had the same laws and rules to help us go after patent trolls, I expect that we would.

Easily Amused (profile) says:

Re: Re: Re:2 Dear Mikey

Wait… rational, respectful, non-inflamatory, non ad-hom discussion that stays on topic through several replies?!?!?! Are we still in the Techdirt comments section?!?!


TheFatMan has a few valid points about the process, and i totally agree that the Examiners are in a seriously untenable position of having to work within a set of rules and guidelines that rarely directly relate to what anyone fairly well-versed in IP issues would call common sense. That said, I don’t think Mike was talking about the Examiners here. As detailed in several previous articles and in the newly posted Amazon-white-background-photo debacle, you guys don’t have to “go after patent trolls”. All you need to do is not grant patents for obvious crap.

Now I totally understand that your ruleset and guidelines for such things are seemingly fluid and sometimes contradictory, and I know that most of the people in your position are good people trying to adhere to the policies they are given. Which is why almost all the criticism and snark about the USPTO is aimed at the leadership, not you guys in the trenches. I am far too lazy to lookk up supporting links right now, but a simple search for ‘USPTO’ on Techdirt will probably cover it.

Anonymous Coward says:

Re: Re: Re:2 Dear Mikey

Mike’s comments on a topic are typically rooted in the extensive number of articles that he has already written on the topic.

If a given article does not directly establish his reasoning, it exists elsewhere and not having read more of what he has already written is effectively taking him out of context.

If you feel that the CAFC article was good, understand that articles like that will often be the basis for other comments he makes.

John Fenderson (profile) says:

Re: Re: Re:2 Dear Mikey

“The PTO is certainly not blameless, but the bulk of the problems are beyond the control of PTO.”

Yes and no.

Yes, the major reason for the breakdown of the patent system is Congress. However, the PTO could be pushing back a lot harder against that. Look at what certain other agencies do when they feel they’re being subjected to bad legislation (NSA, CIA, FBI, etc.): they raise holy hell about it. The PTO doesn’t do that — the most I’ve seen them do is to object politely and then shrug their shoulders when that doesn’t work.

But the thing that the PTO could do is to improve the quality of granted patents. In the industry that I am most familiar with (software), the majority of patents granted are laughably bad, and the overall impact of this on the industry is terrible bordering on disastrous. If the PTO reduced their quotas and empowered examiners to give the amount and type of attention patent applications should get, a lot of these troubles would simply evaporate.

The Wanderer (profile) says:

Re: Re: Dear Mikey

I largely agree with what others (particularly John Fenderson) have said in response to this, but there’s one thing I wanted to focus on:

There is a notion that we grant everything. Simply not true. I cant speak for every area within the Agency or every Examiner, but plenty of applications are never issued. We have this thing called an abandonment. We use it. That being said, I’ll admit that I don’t think we have a perfect system. We have production, don’t meet it and it can cost you your job.

I think there’s a pretty strong case to be made that this last point, specifically, is one of the major roots of the problem: patent examiners not being given as much time as is needed to fully review any patent application, however much time that may end up being.

Some patent applications may be obviously rejectable within a matter of minutes. Others may take a few hours. Others may take days, weeks, or even months to fully investigate and review all possible prior art, et cetera – though in that last case, you’re starting to get into the level of complexity where a lawsuit and court review is almost guaranteed.

Requiring each patent examiner to process a certain number of patent applications per (hour, day, week, whatever), and approving the application if no reason to reject it has been found by the end of the allotted time, will inevitably result in bad patents being issued. Given those conditions, there’s just no way to avoid that outcome.

Allowing each patent examiner to take as much time as is needed on any given patent application would have two obvious downsides: it would decrease the throughput of processing patent applications (thus building up the backlog of pending applications), and it would potentially enable an examiner who is so inclined to just sit around being lazy on the clock rather than actually do a reasonable amount of work.

The latter (lazy patent examiners getting paid to slack off) would be bad, but there are probably other ways to avoid it – other metrics to assess examiner performance, et cetera.

The former (decrease in patent-application-processing throughput, and resulting increase in patent-application backlog) could be argued to be a bad thing for obvious reasons, but it could also be argued to be a good one, for the potential disincentive it could create for filing large numbers of patent applications. However, it’s far from clear that such a disincentive would actually appear in practice.

Regardless, there’s a reasonable position to be taken that the cost of approving bad patents outweighs the cost of taking a long time to approve good ones. I think I, for one, might be likely to take that position; at the least, I’d like to see the experiment tried.

Geno0wl (profile) says:

Split them up

I have been saying for years now that they should “split them up”.
AKA split Cable companies from ISPs.
Competition in the physically space is a “natural” monopoly. You can only put so many wires, poles, ect up. Any Cable companies have been shown at time to purposefully gimp internet services in favor of their cable services. No Cable company wants to give good traffic for netflix, because they means they loose eyeballs on their more lucrative cable services.
So I say, split them up. Force cable to actually compete against the internet for quality. THAT is real “competition”.

John Fenderson (profile) says:

Re: Split them up

Yes. There are two reasons why I have always supported the (obvious) notion that ISPs should be common carriers: 1) it will force the ISPs to separate out their content side from their ISP side, which would be nothing but a benefit to consumers and 2) it will make it illegal for ISP to spy on their customer’s datastreams (you know that it is legal for them to do this right now, right).

The net neutrality impact would be a benefit, but not one of the most important benefits. A solution from the FTC would be weak sauce in comparison. Better than nothing, but still…

Anon says:

USPTO funding

We all know that Congress changed the funding for the USPTO from taxpayer-funded to user-fee-funded, so now the USPTO has a financial incentive to grant the application, collect the fee, and let the courts set it out. Mike’s statement: “…Congress and the USPTO are still failing to do anything useful about patent trolls…” is absolutely true. They even granted a patent on a stick! If you work for the USPTO, maybe you should find other employment. In the real world, if an organization’s funding falls apart, it’s the only logical thing to do. Thank Congress on your way out. And avoid the PO, they are apparently Congress’ next victim.

Internet Missionary says:

Anti-muni Laws

Wholeheartedly agree with the thrust of the article, but I think a correction is in order. There are not “total bans on municipal broadband in 20 different states.” I’ve read every anti-muni broadband law in the country and I recall only 4 of them can be called bans (which still make some exceptions for i-nets and/or dark fiber) with the balance being onerous restrictions falling short outright bans. Nonetheless, they should all be repealed. I just thought I’d point that out.

Josh in CharlotteNC (profile) says:

Re: Anti-muni Laws

Bullshit. North Carolina is in the “technically-not-a-ban-but-still-a-ban-wink” column.

North Carolina: “Numerous” requirements make it impractical to provide public communications services. “For example, public entities must comply with unspecified legal requirements, impute phantom costs into their rates, conduct a referendum before providing service, forego popular financing mechanisms, refrain from using typical industry pricing mechanisms, and make their commercially sensitive information available to their incumbent competitors.”

Anonymous Coward says:

Follow the Money!

The USPTO is sitting on a gold mine! I did a little research and found a bunch of stuff.

One lawyers estimates of the total cost:

USPTO Fee Schedule (start adding this stuff up!):

Another Law Firm view:

In short, the USPTO and the patent lawyers, get paid a bundle for every application, modification, and step along the process. Notice that “Big Entities” get to pay a bunch more than the little guys. In any event, the ISPTO takes in a whole pile of cash for each patent granted. They have no incentive to economize or to cull the applications.

Erin says:

We need the FCC

I’m all for bringing in the FTC to do what it can to protect consumers in addition to the FCC, but replacing the FCC with the FTC in this context would be a huge mistake. This idea is floated constantly by ISPs and their think tanks nowadays, but it is just flat-out wrong. Unlike the FTC, the FCC would have clear rulemaking authority under Title II to handle net neutrality, so we would have clear rules in advance of any harms, as opposed to waiting to see which cases the FTC chooses to go after. The FCC also receives and acts on the many complaints consumers send in, while the FTC has no obligation to respond to individual complaints. Basically, if you tried to lean on the FTC instead of the FCC for net neutrality, you’d leave behind decades of useful agency precedent, lose the chance clear rules to guide companies, and abandon hope of having an agency responding to each and every complaint that comes in.

The entire reason you see cable companies, telcos, and their think tank allies supporting this idea is that it would effectively obliterate any hope of enforceable net neutrality rules.

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